Bitcoin value soars as investors go for currency that won’t depreciate
BITCOIN neared its all-time high yesterday, with the surging digital currency tipped to become a new safe haven asset as the world grapples with growing economic uncertainty.
The unit broke the $1 100 (R15 000) barrier on the Bitcoin Price Index, an average of major exchanges, to continue a dizzying rise that made it last year’s best-performing currency.
It has fluctuated wildly since it was created in 2009 and lost three quarters of its value when it plummeted from its previous BPI high of $1 165.89 (R16 000) in 2013.
News of a major bitcoin theft by hackers in August sent its price plunging by more than 20%.
But analysts say its volatility will ease as volumes grow and point to a strengthening US dollar and tightening currency and capital controls, as well as the rise of the digital economy, as major factors behind its appreciation.
In particular, analysts say, the chaotic withdrawal of high-value bills in India and restrictions on buying currency in China as the yuan slides against the dollar have stoked demand.
Exacerbating the rocketing demand is a tightening supply of fresh bitcoins.
The currency was always meant to be finite, and more than three quarters of the planned 21 million bitcoins have already been “mined”.
Encrypted digital coins are created by supercomputers and then traded online or exchanged for goods and services.
Bitcoin expert Vinny Lingham, chief executive of US digital identity protection startup Civic, said the dwindling supply of new bitcoins, and regular currencies sliding against the US dollar as the Federal Reserve ratchets up interest rates, were pushing up the unit’s value.
“There are fewer bitcoins coming out and people are seeing bitcoin as a good hedge against currency devaluation in their countries.
“Instead of buying the US dollar, people are buying bitcoins,” he said.
Lingham has predicted that bitcoin will be worth about $3 000 (R41 000) by the end of the year.